Healthcare Rationing: Real Scary

When Sarah Palin said that the emerging healthcare reform legislation would lead to “death panels” and government rationing of care, her language was explosive, but her premise about rationing was not.

The most critical test of any reform proposal is whether it will empower individuals or impose on them. It is a fact that the leading bills in Congress would increase the power of government and decrease individual freedom. You cannot spend an additional $1 trillion of taxpayer money and reduce the role of government. You will get new bureaucracies, more regulation, more complexity. That means you will have less control of your healthcare.

Disagree? Just read the versions of healthcare legislation: H.R. 3200 in the House. One key proposal is to mandate an “essential benefit package” for every private insurance policy sold in the United States. Currently, individuals and employers usually make these coverage decisions. This legislation creates a new federal Health Benefits Advisory Committee that would decide instead. For example, if you are a single male with no children, the legislation still requires you to have maternity benefits and well-baby and well-child care coverage. You don’t want or don’t need that coverage? Sorry, you have to pay for it anyway.

The most critical test of any reform proposal is whether it will empower individuals or impose on them.

Other planned agencies would give the federal government unprecedented and unaccountable control over your healthcare. The so-called Health Choices Administration and the National Health Insurance Exchange would set various standards for all health insurance policies. The president is also pushing for another new agency called the Independent Medicare Advisory Council. Described as a cost-control initiative, it would be made up of five government appointees who would, by determining Medicare reimbursement amounts, in essence decide what would be covered and what would not. The fear of government rationing is based on the premise that once government has such power, especially the ability to control what is covered by your private insurance policy, it also has the power to deny and restrict.

Those defending the House legislation claim rationing is not in any of its versions, and though that is technically true–no one wants rationing–the unprecedented power this legislation would grant to virtually unaccountable government agencies is all but certain to lead to rationing.

Consider Medicare, which is projected to go broke within the decade. As the baby-boom generation ages, it will put only more stress on the system. With more than 25% of all Medicare costs generated in the last two months of life, government already has the motive to ration care to the elderly. If the House legislation were to become law, these new government bureaucracies would then also potentially have the power. Are we supposed to trust that they won’t use it?

If such rationing occurs, rules will be needed to determine whether to spend federal healthcare dollars on a given individual. What might those rules look like? Dr. Ezekiel Emanuel is a key healthcare advisor to President Obama and the brother of White House Chief of Staff Rahm Emanuel. He co-wrote an academic article in January exploring the ethical challenges of valuing an individual’s life in the context of allocating medical resources that are very scarce, such as organs or vaccines.

As an example, he and his coauthors proposed a system of valuation that could take into account that “[a] young person with a poor prognosis has had few life-years but lacks the potential to live a complete life. Considering prognosis forestalls the concern that disproportionately large amounts of resources will be directed to young people with poor prognoses.”

In a 1996 article in another journal, Dr. Emanuel similarly hypothesized that “services provided to individuals who are irreversibly prevented from being or becoming participating citizens are not basic and should not be guaranteed. An obvious example is not guaranteeing health services to patients with dementia.”

Dr. Emanuel contends that he was exploring what rules might be used to ration care, not specifically prescribing policy. But isn’t that the point? What we see at town hall meetings are Americans who legitimately believe it would be fundamentally unjust for government panels to make these kind of ethical decisions instead of individuals, loved ones and doctors.

To be clear, the healthcare system is in need of reform, particularly health insurance. But the answer is not central planning. The answer is more market competition–giving consumers more choices, more information and more control.

Here is one example. There are more than 1,300 health insurance companies in this country, but currently, consumers can buy only a product licensed in each individual state. Creating a nationwide health insurance market where any individual or group can shop for less expensive coverage from another state would provide more choices, forcing private plans to create better products, improve services and lower prices.

We must also equip individuals with information on healthcare cost and quality. Releasing the Medicare-claims history of doctors and hospitals (with patients’ personal information removed) would give Americans more knowledge to choose the most efficient institutions, practitioners and the most effective treatments. Inexplicably, this taxpayer-funded data remain locked away.

Of course, some Americans also need financial resources to pay for their healthcare choices. Tax credits are one way to help consumers purchase private healthcare coverage, or we could allow individuals to deduct the cost of insurance they purchase, just as employers do now. These are just some solutions to create competition to drive down costs while increasing quality.

There is no doubt that we badly need to improve our healthcare system. I welcome the comprehensive debate now taking place across the country on how to accomplish this goal. But reform must empower individuals, not government.